Sounds like all STR options are out since this is prohibited and your HOA is watching you closely.Roommates may be a good option given the short payback.

You just have to be aware of the rules when it comes to the sale of the home: The final rule, "FR-4615 Prohibition of Property Flipping in HUD's Single Family Mortgage Insurance Programs," makes recently flipped properties ineligible for FHA mortgage insurance.

"The Stop Predatory Investing Act would prohibit an investor who acquires 50 or more single-family rental homes from deducting interest or depreciation on those properties.

Check with Insurance companies that need to put up people when there is a large claim that requires homeowners to be displaced during lengthy repairs.I get calls from a Craigslist ad, but I always have STR bookings that prohibit it except once.

Look, bottom line - there are many ways where professional investors keep profits at maximum vs expenses (for example: purchase costs can be prohibitively expensive, but if you buy the company holding the asset - there are ways you don't pay the acquisition tax (sometimes 6 and 7% of the pp!).

To me, those factors make it prohibitive to invest here.

If there is a lapse in coverage that could be the issue or Is there another issue (knob & tube wiring, dogs on the prohibited list, etc.) that could causing the problems. 

If one side no longer likes the deal, he can attempt to renegotiate, or, if not prohibited in the agreement terminate the partnership.

I am totally with you that CA is prohibitively expensive as a first-time investment.

I believe most new investors should focus on their local market, unless it's extremely cost prohibitive or has a declining population.